This is the Kato Daily Podcast for Thursday, August 15th, 2004.

I'm Keila Brown.

Two proposals with Heads of Steam this election cycle are ending taxes on tips and

ending taxes on social security payouts.

Cato's Adam Michelle argues that yes, tax rates should be lower, but special carve-outs for particular groups

is a bad way to go about it. We spoke earlier this week.

Donald Trump is out with two proposals on taxes, specifically taxes on income,

specifically taxes on income that he would like to no longer tax. But let's unpack it because it's worth understanding

the policy details here. He is out with proposals to end taxes on tips, which I believe goes back at least to

Ron Paul's 2012 campaign for president and ending income taxes on Social Security benefits

that are being distributed.

You and I spoke about this not being recorded last week, and my confusion, which I hope you'll explain again, was that,

look, the vast majority of money that people receive in Social Security benefits

they never earned in the first place.

Help me understand the issue of income taxes and Social Security benefits.

So I think it's first important to start with lower taxes on income are a good thing and a goal we should be achieving. The problem is when we start exempting

specific types of income from taxes, this income from tips or income from Social Security, what we want to do is tax all income equally at one low rate.

In the case of Social Security, most seniors don't pay any income tax on their Social Security benefits.

There's a larger standard deduction for people over 65, and there's a threshold at which the taxes on Social Security,

below that threshold, you pay no income tax.

And so it's something like 60% of seniors

currently pay no income tax on their Social Security benefits.

...